MARKET REPORT: Domino’s delivers £25m boost for shareholders despite the hot summer for putting people off their pizza
Plans to open more stores and buy back £25million of shares at Domino’s Pizza Group have helped counteract cooling sales growth.
The takeaway pizza company said like-for-like sales rose by 2.2 per cent in the June to September quarter, a sharp slowdown from 4.7 per cent in the preceding three months and 8.1 per cent the same time a year ago.
Profits are now expected to be in the mid-range of market expectations, between £93million and £99.6million – down from the £95.9million to £101.4million that Domino’s was previously guiding towards in August.
Chief executive David Wild blamed the scorching summer for putting people off their pizza.
Slowed growth: Domino’s Pizza said like-for-like sales rose by 2.2 per cent in the June to September quarter, a sharp slowdown from 4.7 per cent in the preceding three months
He said: ‘Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter.’
Investors might have been disappointed, had Domino’s not quickly managed to mollify them.
It announced it would buy back £25million worth of shares, theoretically meaning those left in the market should become more valuable.
Domino’s added that its stores would hire 5,000 more staff over Christmas to ensure ‘great service’, and that it was on track to open 60 stores this year.
But analysts warned that, by taking ownership of outlets which have traditionally operated on a franchisee model, Domino’s will be forced to spend more which could reduce returns.
Stock Watch – Angus Energy
Investors were flocking to UK-focused oil company Angus Energy, spurred on by a rush of good fortune at competitor UK Oil & Gas (UKOG).
Shares in Angus shot up 17.6 per cent, or 1.8p, to 12p after UKOG said its Portland oil field had been declared commercially viable.
Essentially oil prices were high enough, and there was enough oil, to make the field worth drilling.
Investors hoped that Angus’s well in Balcombe, West Sussex, would be just as lucrative.
Even so, shares climbed 5.4 per cent or 14.2p to 274.9p.
Across the pond, US stocks fell sharply as trade war fears reared up once again. The Dow Jones was down more than 1.3 per cent, while the S&P 500 shed 1.4 per cent.
US National Economic Council director Larry Kudlow ramped up the rhetoric on China, calling its businesses ‘illegal traders’.
In what has been a volatile October, both the Dow and the S&P have lost more than 5pc over the month.
The FTSE 100 ended the day down 0.4 per cent, or 27.61 points, at 7026.99, as investors were alarmed by European Union officials raising the possibility that the post-Brexit transition period could be extended.
But coach company National Express impressed the FTSE 250 with a strong set of numbers.
Revenue had climbed by 9.5 per centbetween July and September.
Chief executive Dean Finch said: ‘We had a good summer’s trading, with our UK coach business in particular delivering outstanding organic growth.’
Mid-way through next year the firm is set to begin new bus contracts in Morocco which are expected to bring in £880million of revenues. Shares edged up 6pc, or 23.6p, to 419.8p.
At the luxury end of the transport sector, James Bond’s car maker Aston Martin hit new lows.
The company, which only began trading on the stock market this month, fell 3.3 per cent or 49.8p to 1450p.
This now puts Aston Martin’s shares £4.50 below their 1900p float price, meaning more than £1billion has been wiped off the company’s value over its short time on the stock market.
The rapidly declining share price is not a sign of any fundamental problems with the business, according to analysts. Instead, criticism has fallen on the posse of bankers who helped to float Aston Martin for pricing it too highly.
North Africa-focused oil and gas company SDX Energy restarted trading on London’s junior market AIM, after revealing that it had ditched plans to buy BP assets in Egypt.
SDX said talks had been terminated by mutual agreement, but it did not expand on why the discussions had broken down.
The oil and gas assets had been estimated to be worth around £380million. SDX’s shares slumped by 3.5 per cent, or 2p, to 55.5p.
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